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					                        EU COUNCIL SECRETARIAT
                                       ~FACTSHEET~
                                                                                                        June 2006



                         Financing of ESDP1 operations

Article 28 of the Treaty on European Union (TEU) sets the principles for the financing of civilian
and military crisis management operations. Under that provision, the expenditure related to the
Common Foreign and Security Policy (CFSP) shall be charged to the budget of the European
Community, except for such expenditure arising from operations having military or defence
implications and cases where the Council acting unanimously decides otherwise.

Civilian crisis-management operations are funded from the CFSP budget which is established
following the budgetary procedure laid down for the Community budget.

Operations with military implications or defence operations cannot be financed from Community
funds. For the common costs of such operations the Council of the EU has established a special
mechanism (ATHENA).



A. Financing of military operations: the ATHENA mechanism
In February 2004, the Council of the European Union established a mechanism to administer the
financing of common costs of operations having military or defence implications2.

This mechanism, called ATHENA, is managed under the authority of a Special Committee.
ATHENA manages the common costs from the preparatory phase to the termination of each
military operation. ATHENA has a permanent structure and the legal capacity3.




1
        European Security and Defence Policy (ESDP)
2
        Council Decision 2004/197/CFSP of 23 February 2004 (O.J. No L 63, 28 February 2004, p. 68), amended by
        Decisions 2004/925/CFSP of 22 December 2004 and 2005/68/CFSP of 24 January 2005.
3
        ATHENA has the necessary legal capacity, in particular, to hold a bank account, acquire, hold or dispose of
        property, enter into contracts and administrative arrangements and be a party to legal proceedings.
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Common costs

The Council Decision establishing ATHENA4 includes a list of common costs5.

The Operation Commander is the authorising officer for the operation he commands. Where there is
no Operation Commander, ATHENA's administrator is the authorising officer.
During the preparatory phase of an operation (i.e. before the Operation Commander is appointed),
ATHENA finances the costs for transport and accommodation necessary for exploratory missions
and preparations (in particular fact-finding missions) by military forces6.

As of the date when the Operation Commander is appointed, ATHENA finances most incremental
costs for Operation-, Force- and Component Headquarters, as well as incremental costs for
infrastructure, essential additional equipments and evacuation for persons in need of medical help
(MEDEVAC)7

Moreover, the Council of the European Union decides for each operation whether the transportation
of the forces and their lodging will be financed in common. However, up to now these costs have
never been financed in common.

Finally, the Special Committee may decide that certain expenditures that do not figure on the list of
common costs, can be financed in common for a given operation, except for transport and lodging
of the forces, which remain under the Council's competence.

Given the restrictive definition of the list of common costs adopted by the Council of the EU so far,
the ratio of costs financed in common to total incremental costs for an operation is small (less than
10%). The remainder of the expenditure is financed directly by Member States on the basis of the
"costs lie where they fall" principle.


4
       See footnote No 2.
5
       Annexes I, II, III and IV of Council Decision 2004/197/CFSP.
6
       See Annex II of Council Decision 2004/197/CFSP.
7
       See Annex III of Council Decision 2004/197/CFSP. Operational common costs borne by ATHENA are as
       follows:
       A. Operational common costs relative to the active phase of operations always borne by ATHENA:
       - Incremental costs for (deployable or fixed) headquarters for EU-led operations or exercises: (a)
            Headquarters; (b) Operation Headquarters (OHQ); (c) Force Headquarters (FHQ); (d) Component
            Headquarters (CCHQ); (e) transport costs: transport to and from the theatre of operations to deploy,
            sustain and recover FHQs and CCHQs; transport costs incurred by the OHQ necessary to an operation; (f)
            administration; (g) locally hired personnel; (h) communications; (i) transportation/travel; (j) barracks and
            lodging/infrastructure: expenditure for acquisition, rental or refurbishing of required HQ; (k) public
            information; (l) representation and hospitality.
       - Incremental costs incurred for providing support to the force as a whole (costs incurred following the force
            deployment to its location): (a) infrastructure; (b) essential additional equipment; (c) identification
            marking; (d) medical services.
       - Incremental costs incurred by EU recourse to NATO common assets and capabilities made available for an
            EU-led operation: The cost for the European Union of the application for one of its military operations of
            the arrangements between the EU and NATO relating to release, monitoring and return or recall of NATO
            common assets and capabilities made available for an EU-led operation.
       B. Operational common costs relative to the active phase of a specific operation, borne by ATHENA when the
          Council so decides:
       - Transport costs: transport to and from the theatre of operations to deploy, support and recover the forces
            necessary for the operation;
       - Barracks and lodging/infrastructure: expenditure for acquisition, rental or refurbishing of premises in
            theatre (rental of buildings, shelters, tents), as necessary for the forces deployed for the operation.
       C. Operational common costs relative to the winding-up of an operation, borne by ATHENA.


                                                                                                                      2
ATHENA currently administers the financing of the common costs of the following
operations/actions:
   - Operation EUFOR-Althea (Bosnia and Herzegovina): 43 million euros in 2006;
   - EU supporting action to AMIS (Sudan / Darfur): 1.1 million euros until 30 June 2006.
   - Operation EUFOR RD Congo: 16.7 million euros in 2006 (reference amount).

In 2005, ATHENA was responsible for the financing of specific common costs during the first two
months of a civilian project to reform the chain of payment in the Democratic Republic of Congo
(DRC) (EUSEC-RD Congo mission) financed with voluntary contributions from 6 Member States,
until the mission could be accommodated under the CFSP-budget (0.9 million euros).

The ATHENA budget (financed by 24 Member States) in 2005 was approximately 60 million
euros. For 2006, the budget is about 45 million euros (this amount does not include the budget for
the EUFOR DR Congo operation).

Early financing

In order to improve the rapid reaction capability of the European Union, an early financing process
has been set up.8 It allows rapid decision-making and planning as well as rapid deployment of
forces. Member States have the choice either to pay contributions in anticipation of a possible Rapid
Response operation or to pay their contribution to a Rapid Response operation within five days.

17 Member States have participated in the provisional financing scheme and ATHENA is endowed
with provisional appropriations exceeding 10 million euros. In addition, each of the 17 Member
States may decide individually that its contribution to the provisional appropriations can be used for
an operation other than Rapid Response.

Participating States and contributions

Participating States are the Member States of the European Union except Denmark (this country has
opted out from actions with defence implications under the EU Treaty). Third states may contribute
to the financing of a given military operation.

In accordance with the Treaty on European Union, contributions to ATHENA are based on a GNI-
scale9 (see Annex below).


Organisational structure

ATHENA is managed under the authority of a Special Committee composed of representatives of
the Member States contributing to the financing of each operation - which may vary from one
operation to the next. Third states which contribute to the financing of an operation may take part in
its meetings, without taking a vote. The Commission attends the Special Committee's meetings, but
cannot take a vote either.

The Secretary General of the Council of the EU appoints an administrator for ATHENA for a
period of three years. The administrator coordinates work on financial questions relating to the
Union's military operations. He/She is the contact point for national administrations and for
international organisations. His/her tasks are inter alia drawing up a draft budget that he/she


8
       Council Decision 2005/68/CFSP of 24 January 2005.
9
       Gross national income (GNI) of Member States.

                                                                                                    3
submits to the Special Committee as well as administering revenue and common costs that occur
outside the active phase of operations.

Furthermore, the Secretary General of the Council appoints an accounting officer for ATHENA for
a period of two years. He is responsible for keeping ATHENA's accounts and for implementing
payments on behalf of ATHENA.

During the active phase of an operation, it is the Operation Commander who provides elements for
the budget of the operation he commands. In this function, he/she can enter into contracts on behalf
of ATHENA and can open a bank account on behalf of ATHENA for the operation he commands.

Review

The Council Decision which established ATHENA will be reviewed during the second half of
2006.


B. Financing of civilian operations
Civilian crisis-management operations are funded from the CFSP budget (allocated 62.6 million
euros in 2005 and 102.6 million euros in 2006). The use of the funds on this budget line is decided
by the Council of the EU.

The CFSP budget is established following the budgetary procedure laid down for the Community
budget. The CFSP budget is implemented by the European Commission. A specific sub-section of
the Community budget covers the CFSP operational expenditure (Chapter 19 03). It is part of Title
19 (External Relations) of the Community budget.

Among the different CFSP instruments, only Joint Actions translate into administrative and
operational expenditure. The Council of the EU adopts a Joint Action and decides on the budgetary
resources allocated to it. The European Commission commits, contracts and disburses the budget
allocated to the action.

The following ESDP10 operations were/are financed under the Community budget line:

     •   EU Police Mission in Bosnia Herzegovina (EUPM)
     •   EU Police Mission in the former Yugoslav Republic of Macedonia (Proxima)
     •   EU police advisory team in the former Yugoslav Republic of Macedonia (EUPAT)
     •   EU Police Mission in DR Congo (EUPOL Kinshasa)
     •   EU Integrated Rule of Law Mission for Iraq (EUJUST Lex)
     •   EU Rule of Law Mission in Georgia (EUJUST Themis)
     •   EU security sector reform mission in the Democratic Republic of the Congo (EUSEC
         Congo)
     •   EU Support to AMIS II (Darfur)
     •   EU Monitoring Mission in Aceh (AMM)
     •   EU Police Mission for the Palestinian Territories (EUPOL COPPS)
     •   EU Border Assistance Mission for the Rafah crossing point (EU BAM Rafah)

                                                ----------------

10
         European Security and Defence Policy (ESDP)

                                                                                                    4
                                           ANNEX


                   GNI scale (in %) used for contributions to ATHENA
                         where 24 Member States are contributing


 Member State                  2004                     2005                     2006
           Belgium               2.91                     2.83                      2.88
    Czech Republic               0.51                     0.80                      0.91
           Germany              22.46                    21.46                    20.97
            Estonia              0.05                     0.08                      0.09
             Greece              1.67                     1.69                      1.74
              Spain              7.86                     8.05                      8.28
             France             16.67                    16.13                    16.19
             Ireland             1.22                     1.21                      1.30
               Italy            13.77                    13.36                    13.29
             Cyprus              0.08                     0.12                      0.12
             Latvia              0.07                     0.10                      0.12
          Lithuania              0.11                     0.18                      0.19
        Luxemburg                0.22                     0.23                      0.24
           Hungary               0.50                     0.80                      0.83
              Malta              0.03                     0.04                      0.04
        Netherlands              4.85                     4.53                      4.47
            Austria              2.32                     2.29                      2.28
             Poland              1.30                     1.86                      2.21
           Portugal              1.40                     1.33                      1.31
           Slovenia              0.18                     0.26                      0.27
           Slovakia              0.22                     0.33                      0.36
            Finland              1.52                     1.48                      1.48
            Sweden               2.79                     2.76                      2.83
   United Kingdom               17.28                    18.07                    17.57
NB: percentages shown here are rounded for legibility. To calculate actual contributions,
figures are not rounded.




                                 _______________________


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